Muni Bonds Close Lower,
But Outperform Treasurys

Yields for the 30-year Treasury bond pushed toward 6% near the close on news of a rally in the Asian and U.S. stock markets and on stronger-than-expected consumer confidence numbers.

The March municipal futures contract dipped in response, falling 15/32 to 122-21.

Two large blocks of Empire State Development Corp. bonds, totaling $28 million, came into the market via bids-wanted lists. The bonds were bid at 5.45% for 5.25% bonds of 2021 and at 5.15% for 5.25% bonds of 2010, traders said.

Among other items out for bid Tuesday were $1 million Iowa Student Loan Liquidity Corp. 6% bonds of March 1, 1998 and $1 million Morgan State University, Md. 7% bonds of 2020. Neither attracted much interest, traders said.

"There was a lot of year-end window dressing going on," said a New York trader.

Other traders said intermediates were getting good bids throughout the session as buyers looked for bonds not tied to contracts or long duration. Longer-term bonds were under pressure from futures arbitrage, traders said.

Among actively-watched issues, Marion, Indiana 5% bonds of 2027 were bid at 5.31%, down from 5.27% at Monday's close.